The frequency and severity of supersize verdicts are on the rise. As a corporation, you must have a strategy in place for avoiding these types of rulings, also known as nuclear verdicts.
Why are these types of extreme verdicts and settlements increasing? What can you do to protect yourself from costly litigation? As an insurance provider specializing in risk management and risk insurance, we’ve identified some key areas to help our customers with avoiding nuclear verdicts.
The Rise Of Nuclear Verdicts
A nuclear verdict is a jury award with a penalty of more than $10 million. It also simply refers to an award that is substantially disproportionate to what’s expected based on the economic damages of the case.
These types of nuclear awards are on the rise in several industries. For instance, the trucking industry alone has seen a 1000% increase in the size of settlements from 2010 (increasing from $2.3 million to $22.3 million). In 2019, the largest jury award in the history of the U.S. was awarded, totaling $8 billion.
Many factors have contributed to the upsurge of nuclear verdicts. One of the biggest is the lack of corporate trust. Only 25% of people have confidence in big business, and around one-third of Americans say they have little to no trust at all for large companies.
Pair that with the growth in litigation financing and the overall growing feeling of social pessimism, and it’s easy to see why so many of these nuclear verdicts are occurring.
It’s crucial for defendants in these cases, often large corporations with deep financial resources, to start presenting a robust defense that is proactive, not reactive, and start taking steps to avoid and prepare for a nuclear verdict.
Preparing for and Avoiding Nuclear Verdicts
Risk insurance plans can help alleviate the financial devastation of these supersize verdicts. It’s important to take the time to ensure your coverage can handle the blowback from one of these rulings. These trials often impact Auto, General Liability, Excess/Umbrella, and Professional insurance policies, so you’ll want to check your coverage in these areas first.
Pairing that step with ethical business practices is the best way you can protect yourself. On the other hand, insurance companies have a lot of things they can do to prepare for and tackle this emerging challenge.
Here are how some companies are stepping up to the plate:
- Raising the bar on defense attorneys and the development of more compelling trial strategies. Savvy insurance companies are recognizing that the tactics employed by the plaintiffs to sway juries must be countered with a sympathetic defense team that presents its case with power and empathy.
- Staying aware and involved with current actions, like the GAIA’s (Government and Industry Affairs) efforts. They’ve been lobbying state legislatures for insurance and tort reform initiatives to improve the cost of doing business in those states. There’s strength in numbers, so many insurance companies are finding ways to get involved. GAIA is also collaborating with various industry groups, including the American Property Casualty Insurance Association, Institute for Legal Reform, and the American Tort Reform Association.
As specialists in the risk insurance space, we’re taking our efforts a step further.
How IOAUSA is Avoiding Nuclear Verdicts for Our Clients
The steps we’re taking to support our clients against nuclear verdicts include:
- Using our data and analytic capabilities to determine precisely how much insurance a company should need. Our specialists work to figure out the perfect indemnity spend vs. case life ratio so that our clients are protected but not overpaying.
- Providing our claims professionals with better and more effective tools and solutions to handle this new challenge.
- Further opening up the lines of communication between Claims, Underwriting, and Risk Engineering teams to share knowledge and insights.
We believe true risk management can’t happen if everyone is siloed. Instead, we’re keeping communication wide open, so we can lessen the incidence of litigation and make sure our customers are prepared if it happens to them.
If you’d like to work with an insurance partner committed to your best defense, contact Roger today.
